It is a constant challenge for any fast-growing business to ensure that their systems and processes continually evolve, to improve efficiency and decision-making and enhance customer experience. As a sector which has seen rapid expansion, insurance-linked securities (ILS) businesses understand these growing pains. When the business grows, so does the complexity—stakeholder demands and associated reporting increases, and the need for strong analytics and effective risk modeling really comes into play.
I recently talked with Adrian Mark, Head of Non-Life Analytics at Leadenhall Capital Partners about a project we did with him in 2019. Leadenhall is a great example of a company that has effectively scaled its business since establishing in 2008. Successfully leveraging its relationship with MS Amlin, Leadenhall built a business model that helped it become one of the world’s top 10 ILS managers. And it is clear from the ownership stake from Mitsui Sumitomo (MSI) in 2019 that Leadenhall are continuing their climb.
With ambitious future growth targets, Adrian stated that Leadenhall recognized the challenges to date but also the need for systems and processes to scale and evolve:
“We had grown at such a fast pace over a number of years that opportunities were limited to take stock of where we could enhance processes to better serve the business. We knew we had to reassess our systems and analytical processes for us to be able to assess new classes and to meet our growth objectives.”
In our discussion, Adrian stated that the business had become more sophisticated, expanding their product offering with new innovations, which had seen an increase in deal complexity. Their unique business model requires a distinct set of analytic needs with significant investment volume for both catastrophe bonds and collateralized reinsurance. And like other ILS businesses, their investors wanted to be fully informed on the status of their position especially after the recent upturn in catastrophe losses.
Leadenhall approached RMS in 2019, looking to solve what they saw as a key challenge to continue their growth. They wanted to deliver enhanced analytics and streamline their modeling processes and were looking for input as to where to prioritize investment. It was an opportunity to work together and help Leadenhall redefine their analytics strategy.
What did we do? RMS Consulting conducted a month-long process review covering all areas of their modeling and reporting. We examined their existing resources, processes and technology, through detailed interviews and value stream analysis sessions, identifying pain points and opportunities to improve the analytics delivered to the business.
After further discussions to prioritize recommendations, and workflow analysis to build a business case for change, RMS presented proposals to Leadenhall covering system architecture, exposure and loss analytics, integration & automation, and governance.
Leadenhall have implemented many improvements since this process review and have recently repeated the value stream analysis with RMS. This subsequent review highlighted multiple material improvements across the analytics workflow in terms of value and efficiency.
What this shows is that defining an analytics strategy is essential—whether you are rapidly scaling a business or believe that current processes are being outgrown by business demands. Taking stock, getting an external perspective, making a rational assessment and devising a plan to move forward can pay dividends.
I concluded my discussion with Adrian by asking him the difference that the review of their analytics strategy had made:
“Following structured interviews and data gathering, RMS were able to synthesize patterns and challenges within our business and demonstrate the impact of solving them. After discussing the proposals internally, we implemented a number of recommendations. We actively used the target System Architecture developed on the project to help redefine our analytics operational model. The project helped us identify where to prioritize resources, provided an external view that validated existing internal initiatives and added new ideas to the strategy.”
Since joining RMS in 2014, I have seen a rapid acceleration in the pace that clients adopt technology. Embracing advanced analytics, integrations and processes are all now possible using technology that dramatically reduces costs and implementation time compared to even five years ago. However, being able to quantify and demonstrate the value of any planned or completed investment is critical to help set a course. That has always remained true and is something we focus on specifically within the consulting team at RMS.
If you are interested in a process review or risk strategy engagement, solution design or production implementation services, please contact Consulting@rms.com
About RMS Consulting
We have worked with many of the largest (re)insurers on catastrophe modeling related engagements over the last 10 years. No other consulting firm has the depth of catastrophe modeling experience, coupled with insurance domain and technology. We are the only company that has developed a catastrophe risk maturity index to enable benchmarking of your scores against peers. Find out more here.